Month: September 2010

The state should pursue more opportunities to turn parks over to private companies, or at least let them operate retail concessions, a panel appointed by Gov. Jan Brewer to study government recommended Tuesday.The initial report by the Commission on Privatization and Efficiency suggested turning more of government over to the private sector. Members also want to push Congress to repeal laws that now prohibit the state from letting private firms set up shop in rest areas along interstate highways.

But state Gaming Director Mark Brnovich, whom Brewer named to head the panel, said this is only the first step. He said the nine-member commission, all handpicked by the governor, is predisposed to believe that if a government service can be privatized, it probably should be.

“Like the governor, members of the commission are strong believers in the free-enterprise system and the free market,” Brnovich said in an interview. “History has shown that the private sector is able to come up with innovative and, very often, cost-effective solutions to problems.”

Brnovich acknowledged that private companies, unlike government, must make a profit. But he said commission members don’t see this as meaning higher costs for taxpayers.

“The free-market system, capitalism, works because folks are forced to come up with better ideas and create greater efficiencies and come up with new innovations,” Brnovich said. He calls it the “Yellow Book test.”

Arizona State Parks has actually issued a proposal for a whole-park concession. Here is the AP story, which quotes me at the end. Rather than run the quote they used for the article, here is my entire set of comments I sent to the reporter:

1. Our company (and many others) operate public parks in public-private partnerships, and have been doing so for decades. In certain agencies, such as the US Forest Service (USFS) or the Tennessee Valley Authority, this is totally accepted practice. It is also accepted practice in any number of cities and counties. Why state parks organizations have typically resisted this model, when so many other public recreation and conservation agencies have adopted it, is somewhat of a mystery to me.

2. The Oracle RFP is pretty thin gruel. When I presented to both Arizona State Parks (ASP) and the legislature some months ago (not last week as in your email), I said that there were many parks on their closure list that were standalone business opportunities but Oracle was not one of them. I said that Oracle could probably be included packaged with another nearby park — I run many parks that lose money but are packaged with other parks that make money so the whole package is still attractive. Also, by putting together several parks in one area, there are certain economies of scale in management and operations to be gained. I have not been able to debrief my COO who went to the Oracle meeting, but his general sense was that the Oracle was encumbered with many restrictions that almost guaranteed it could not be a good commercial opportunity. We are able to operate parks with much lower costs than can ASP at similar or superior quality levels, but at some point the revenue gets too small even for us to make work, and Oracle may well be such a case. I am working from memory, but I think the state brings in about $20-$30K a year at Oracle and spend about $280,000 to operate the park. Even if we cut the costs by 75%, it still does not come close to working.

3. About 3 months ago, a guy named Leonard Gilroy, a local resident who works for the Reason Foundation, told me this: He said the number one play in the anti-privatization playbook was to pick the absolute worst commercial opportunity in whatever organization that is facing privatization pressure, offer it as an RFP, and then when there are inevitably no private bids, say “see, we tried but privatization does not work — no one will bid on these parks.” Given that I was told this months ago, I have to look on the Oracle RFP with some suspicion that it was purposely selected to be a poor opportunity in order to blunt the pressure for privatization. However, this may be unfair as it is impossible as a third party to read motivations. I know, however, that ASP 2nd in command Jay Ream has gone on the record at a public meeting for Lost Dutchman SP that he is in complete and total opposition to privatization or public private partnerships of any sort. For this reason, our company has not ruled out bidding on Oracle, even if it is a money loser, merely to pre-empt this strategy

4. I have not heard anything about Lyman Lake, so such an RFP is new information for me. A whole-park RFP for Lyman Lake structured along the lines that the US Forest Service routinely offers these contracts might be a good opportunity for a private company.

5. I would encourage you to visit my blog at www.parkparivatization.com. The same exact arguments are used over and over against public-private partnerships in parks and these are addressed throughout the blog, but in a compact form right at the top in the FAQ. ASP (and in fact most state parks organizations) acts like this is some kind of risky new rocket science. In fact, our company does this all across the country, and runs 35 whole parks and campgrounds for the US Forest Service right here in Arizona. Check our web site at www.camprrm.com for locations. What has frustrated me through this debate is that nobody (including notably nobody from the Arizona Republic or Arizona State Parks) has bothered to do any basic due diligence on recreation public-private partnerships when we have numerous examples right here in the state. Heather Procincio, district ranger for the USFS in Sedona (Red Rock District) could easily discuss the 20+ year history of the USFS having private companies manage nearly all of its recreation areas in the Coconino NF. Brian Poturalski in the USFS Mormon Lakes / peaks ranger district in Flagstaff also knows a lot of the history. The USFS is the largest public recreation organization in the world and has hundreds of contracts to privately operate parks and has been doing this for decades.